{"id":2504,"date":"2022-02-25T16:23:55","date_gmt":"2022-02-25T20:23:55","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=2504"},"modified":"2022-02-25T16:24:08","modified_gmt":"2022-02-25T20:24:08","slug":"how-to-protect-your-spending-power-from-inflation","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/how-to-protect-your-spending-power-from-inflation\/","title":{"rendered":"How to Protect Your Spending Power From Inflation"},"content":{"rendered":"\n<p>Inflation \u2014 the rise in consumer prices \u2014 is a slow erosion of your money over time. Before 2021, the United States hadn\u2019t seen annual core inflation much above 3% for the better part of 25 years, says Michael Ashton, managing principal of Enduring Investments, a consulting and investing firm in Morristown, New Jersey.<\/p>\n\n\n\n<p>So the 7.5% spike seen over the past year in the costs of fuel, used vehicles, groceries and just about everything else is the kind of sudden and systemic rise that can give a jolt to most peoples\u2019 everyday spending.<\/p>\n\n\n\n<p>Ashton also says that the COVID-19 pandemic stimulus checks and tax relief, combined with the reopening of the economy, fed consumer demand but didn\u2019t replace product inventories. The result: shortages that lead to higher prices.<\/p>\n\n\n\n<p>\u201cHaving supply chain difficulties is part of what inflation looks like,\u201d Ashton says.<\/p>\n\n\n\n<p>With inflation chipping away at your spending power, how can you protect yourself?<\/p>\n\n\n\n<p><strong>Examine your spending<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Trim&nbsp;<a href=\"https:\/\/www.nerdwallet.com\/article\/finance\/discretionary-expenses?utm_campaign=ct_prod&amp;utm_content=1136866&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=jsaenzmcefcu-org\">discretionary spending<\/a>, voluntary spending in categories like entertainment or travel, by just 5%. This is one of those incremental changes that isn\u2019t that difficult to do and goes directly to your personal bottom line.<\/li><li>Don\u2019t delay a major purchase; prices will likely rise.<\/li><li>Shop strategically. Buy more generic brand products and prescriptions. Save on necessary expenses by using coupons and store loyalty programs. Use membership cards (like Walmart+ and others) to pay 5 cents less per gallon for gasoline.<\/li><\/ul>\n\n\n\n<p><strong>Look for savings<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Eliminate any fees you pay for credit cards or bank accounts (late fees, monthly or annual service fees, ATM fees, etc.). Many banks are waiving such fees and credit cards often have fee-free options.<\/li><li><a href=\"https:\/\/www.nerdwallet.com\/article\/finance\/how-to-negotiate-your-bills?utm_campaign=ct_prod&amp;utm_content=1136866&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=jsaenzmcefcu-org\">Renegotiate bills<\/a>&nbsp;like cable, streaming or cell phone for any possible savings.&nbsp; \u201cI can say from my own personal experience \u2013 it\u2019s amazing how easy this is,\u201d Ashton notes. He says that every time he would call his cell phone provider, it would offer him a plan that was far better than his current one. \u201cAnd it doesn\u2019t happen unless you call,\u201d Ashton adds. He now makes a habit of calling once a year and asking, \u201cWhat\u2019s the best plan you have and should I be on that?\u201d<\/li><li>Reduce the number of subscriptions you have, even if by just one. \u201cYou should do an audit of those from time to time because sometimes they sneak in a price increase, and it just shows up on your credit card,\u201d Ashton says.<\/li><\/ul>\n\n\n\n<p><strong>Try to bring more money in<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Search for financial institutions that pay higher interest rates than you are earning now (if you are earning anything at all). Online banks and credit unions often offer high-yield savings accounts that sweeten returns, especially as interest rates rise.<\/li><li>Perhaps the most powerful idea of all:&nbsp;<a href=\"https:\/\/www.nerdwallet.com\/article\/credit-cards\/smart-ways-to-negotiate-your-salary-in-an-uncertain-economy?utm_campaign=ct_prod&amp;utm_content=1136866&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=jsaenzmcefcu-org\">Ask for a raise<\/a>. If you haven\u2019t received an increase in salary in a few years, you\u2019ve likely experienced what amounts to a pay cut because of inflation, Ashton says.<\/li><\/ul>\n\n\n\n<p><strong>The inflation-matching savings account<\/strong><\/p>\n\n\n\n<p>Another inflation-fighting idea: Series I savings bonds. They were created specifically to protect consumers\u2019 purchasing power against inflation, says Zvi Bodie, professor emeritus in finance at Boston University. Bodie holds a doctorate in economics from the Massachusetts Institute of Technology and has become an avid proponent of I bonds.<\/p>\n\n\n\n<p>I bonds rates are keyed to the rate of inflation, which lately has been over 7%, he notes. They are a perfect safe haven for near-term savings. And not a bad addition to your long-term nest egg, too.<\/p>\n\n\n\n<p>A minimum investment in I bonds through&nbsp;<a href=\"https:\/\/www.treasurydirect.gov\/indiv\/products\/prod_ibonds_glance.htm\" target=\"_blank\" rel=\"noreferrer noopener\">TreasuryDirect.gov<\/a>&nbsp;is only $25, and an individual can put up to $10,000 annually into the savings bonds with electronic purchases. The bonds pay fixed interest plus the inflation rate, adjusted twice per year.<\/p>\n\n\n\n<p>You can withdraw your savings without penalty after one year, but if you cash them in before five years, you\u2019ll lose the last three months\u2019 worth of interest.<\/p>\n\n\n\n<p>\u201cSo what you get is essentially a savings account that can\u2019t go down, and that\u2019s going to go up with inflation,\u201d Bodie adds. \u201cDo I need to say more?\u201d<\/p>\n\n\n\n<p><strong>Inflation is not the same for everyone<\/strong><\/p>\n\n\n\n<p>Inflation hit a 7.5% national average in January, but that\u2019s not likely to be your inflation rate, says Ashton.<\/p>\n\n\n\n<p>You may consume different items than the average person and you may not live in an average place, so your particular rate of inflation quite likely varies from the average, according to Ashton.<\/p>\n\n\n\n<p>So, rather than agonizing over a single number as a spending power loss to recoup, use the small money moves above to improve your financial position slowly but surely.<\/p>\n\n\n\n<p><em>This article was written by NerdWallet and was originally published by The Associated Press.&nbsp;<\/em><\/p>\n\n\n\n<p><strong>More From NerdWallet<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/www.nerdwallet.com\/article\/finance\/how-to-lower-your-bills?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=1136866\">How to Lower Your Bills: 40 Ways to Save<\/a><\/li><li><a href=\"https:\/\/www.nerdwallet.com\/article\/finance\/how-to-make-money?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=1136866\">25 Ways to Make Money Online, Offline and at Home<\/a><\/li><li><a href=\"https:\/\/www.nerdwallet.com\/article\/credit-cards\/smart-ways-to-negotiate-your-salary-in-an-uncertain-economy?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=1136866\">Smart Ways to Negotiate Your Salary in an Uncertain Economy<\/a><\/li><\/ul>\n\n\n\n<p>Hal M. Bundrick, CFP\u00ae writes for NerdWallet. Email: hal@nerdwallet.com. Twitter: @halmbundrick.<\/p>\n\n\n\n<p>The article How to Protect Your Spending Power From Inflation originally appeared on NerdWallet.<\/p>\n","protected":false},"excerpt":{"rendered":"Inflation \u2014 the rise in consumer prices \u2014 is a slow erosion of your money over time. Before 2021, the United States hadn\u2019t seen annual core inflation much above 3% for the better part of 25 years, says Michael Ashton, managing principal of Enduring Investments, a consulting and investing firm in Morristown, New Jersey. So [&hellip;]","protected":false},"author":7,"featured_media":2511,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","attr_excerpt":["Inflation \u2014 the rise in consumer prices \u2014 is a slow erosion of your money over time. Before 2021, the United States hadn\u2019t seen annual core inflation much above 3% for the better part of 25 years, says Michael Ashton, managing principal of Enduring Investments, a consulting and investing firm in Morristown, New Jersey."],"footnotes":""},"categories":[3],"tags":[7,21,35,32,22,20],"class_list":["post-2504","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance","tag-bank","tag-checking","tag-digital-banking","tag-invest","tag-money-market","tag-savings"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to Protect Your Spending Power From Inflation - SkyPoint Federal Credit Union<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Protect Your Spending Power From Inflation - SkyPoint Federal Credit Union\" \/>\n<meta property=\"og:description\" content=\"Inflation \u2014 the rise in consumer prices \u2014 is a slow erosion of your money over time. 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